Buyers of big cars will pay more tax
By Wu Chong (China Daily)
Updated: 2005-11-25 05:47

Buyers of big cars will fork out more taxes and those who opt for smaller models will pay less under a revised auto consumption tax likely to come into force next year.

Industry experts see it as a government move to increase fuel efficiency and reduce emissions.

The current tax structure, which has three slabs for different engine sizes, is likely to have five, Zhang Jinhua, deputy director of the China Automotive Technology and Research Centre, said yesterday in Beijing.

For instance, cars with engine displacement of 1 litre or less will pay 1 per cent instead of the current 3 per cent while vehicles with 4 litre or higher engines would pay between 20-25 per cent instead of the current 8 per cent.

"The consumption tax reform cannot have an immediate impact on the clean-vehicle market. But at least, it is an inspiration for car makers," Zhang said at the 4th International Clean Vehicle Technology Conference and Exhibition.

Earlier this month, Feng Fei, a senior official of the government's top think-tank, proposed that tax be levied on buyers rather than on auto producers as is done now.

"We suggest that tax be levied on car buyers directly, which will encourage them to consider buying economy vehicles with lower emissions," said Fei, director of the industry department of the State Council Development Research Centre.

At yesterday's conference, Zhang said if emissions were to be cut significantly, it would require State backing. "Substantial support from the government is needed. Without it, the price for hybrid vehicles will remain high and the market can never grow," he said.

Prius, jointly manufactured by Japan-based Toyota and the China FAW Group Corporation, will be the first hybrid car available in the Chinese market.

Zhu Yanfeng, president of the joint venture, announced on Wednesday that Prius would be available from mid-December for 250,000 yuan (US$31,000) a price tag substantially higher than the average.

(China Daily 11/25/2005 page1)